More talks likely in grocery labor dispute

Thousands of Southern California grocery workers rejected a health-care proposal from the major supermarket chains over the weekend, clearing the way for a strike that both sides say they still hope to avoid.

Negotiations were expected to resume this week. But the workers' union now has the authority to call a strike at any time, after giving the chains – Albertsons, Vons and Ralphs – 72 hours of notice.

The chains described the strike vote as a negotiating tactic and stressed that talks are ongoing. But Albertsons and Vons have begun accepting applications for temporary workers in case their union workers walk out.

More than 90 percent of the workers who voted on the latest contract offer from the chains rejected it. United Food and Commercial Workers spokesman Michael Shimpock said the union will report the results to a federal mediator on Monday, and more talks will likely follow.

"We don't want another strike, but we need to protect our health benefits for ourselves and our families," Ralphs employee Mario Frias said in a prepared statement issued by the union.

Representatives from Ralphs Grocery Company and Vons issued the following statements:

"Asking for strike authorization is a common tactic in negotiations and does not necessarily mean a strike will be called by the union," wrote Kendra M. Doyel, group vice president for marketing for Ralphs. "Our employees want to keep working, and our stores are ready to serve customers. Ralphs, Vons and Albertsons remain committed to reaching a contract that is good for our employees and keeps these union jobs sustainable for the future."

"This is the second time the unions have asked for strike authorization," said Daymond Rice, Vons spokesman. "The negotiations are ongoing and have not fully run their course. The employers intend to stay focused and engaged in the bargaining process. We remain hopeful that we can peacefully reach a settlement that works for both sides. We would urge the union leadership to do the same. The rhetoric around strike votes and harming the companies needlessly alarms and confuses our employees and customers. Likewise, it only distracts the parties from reaching a settlement."

If history repeats itself and workers strike again, it could mean another huge blow to both the chains and union members.

The last strike lasted for 141 days. The supermarket companies pushed for better contract terms, the unions pushed back, and 70,000 grocery workers walked picket lines at 900 stores. When the strike finally ended in February 2004, grocers lost an estimated $1.5 billion while dozens of union workers depleted their savings to pay for household bills.

In the end, the settlement agreement preserved wages, health care and pensions for existing workers while allowing employers to pay new hires according to a new lower tier of wages and benefits.

"How can we trust that this isn't going to turn out like '03," one male worker asked union leaders Friday during an informational meeting. "We gained nothing in five months. Not only did we gain nothing, we lost a lot."

Union leader Greg Conger responded: "I don't think you ever recover from a 141-day strike. And you certainly never forget. But if you are not being treated fairly, you still have to stand up and fight."

As the union and grocery chains sort out their next moves, one thing's for sure: most consumers say they won't let the strike change their buying decisions.

Take Merideth Fleener. The Costa Mesa resident shops at her local Ralphs out of loyalty and convenience. She knows exactly which aisle to go to find her canned goods, milk and produce. The bakery is her go-to place for her children's birthday cupcakes. And, all her family's prescriptions are handled by the store's friendly pharmacist.

To shop elsewhere in the event of a strike? "I'm a creature of habit. I'd kind of feel lost," she admits while loading her weekly groceries into her SUV.

Though it's a tough decision, she said she'd cross a picket line if the grocery union ends up striking.

"This is my main store. I know where everything is."

Other consumers – toughened by their own hardships amid a struggling economy – are motivated to cross picket lines for other reasons.

"Now is not a time to strike," said Bea Almeida, 70, of Costa Mesa. "With the current economy, we all have to learn to give a little and if you have a job, take care of it."

Grocery strategist Burt P. Flickinger said a strike will make it easier this time around for shoppers to defect to lower-price rivals erupting in Southern California.

Since the last lockout and strike of 2003-04, Target, Walmart and convenience stores have increased fresh grocery offerings. And newcomers such as British retailer Fresh & Easy Neighborhood Market and Sprouts Farmers Market are also chipping away at market share.

"During the last strike, it was the best of times in Orange County. Now it is the worst of times," Flickinger said.

As a result, most shoppers are expressing loyalty to themselves, not stores or union members.

"Shoppers are thinking about his or her own tough economic times first, and are looking to try to save more money at these high-volume, low-price competitors," Flickinger said.

While consumer Almeida is sympathetic to the union's cause, the part-time accountant said she's supportive of "all workers" – not just union workers. "We live in very different times. We can't expect raises and benefits as we did before."

If this strike drags on like the last one, the results will likely be catastrophic for both causes, Flickinger said. Once both parties finally agree to a contract, union workers could return to jobs with fewer hours while chains will face even fewer profits.

"There would be such a significant shift," Flickinger said of shoppers defecting to competitors.

Since the last strike, Flickinger's New York retail consulting firm, Strategic Resource Group, estimates that roughly 550 new grocery competitors dot the lucrative Southern California region.

Leading the pack is Target.

Of the 29 Target stores in Orange County, 15 offer fresh groceries. By October, three more Targets (San Clemente, Foothill Ranch and Fullerton) will offer fresh food as the discount retailer makes a giant push to steal share from traditional supermarkets. And so far, they're winning the low-price war.

A typical Southern California Target outfitted with fresh deli foods and produce can generate anywhere from $300,000 to $700,000 in weekly sales. By comparison, Flickinger said Albertsons, Vons, and Ralphs stores, on average, generate about $200,000 to $400,000 per store, per week.

"Target literally, within the last year, has been both Walmart's worst nightmare, and the supermarket's worst nightmare," Flickinger said.

Though Fresh & Easy continues to struggle to turn a profit in America, the no-frills British retailer is a force to be reckoned with, as well.

By this time next year, Flickinger's firm said sales at Fresh & Easy stores in Southern California will generate roughly $1 billion in sales.

Costco is also proving to be a dangerous foe.

After the last strike, Costco warehouses became a key grocery destination for shoppers. Flickinger said high volume stores in Orange and Los Angeles counties generate about $2 million to $3 million in grocery sales per warehouse, per week. That's double the sales generated from Costco locations since the 2003-04 grocery strike.

The onslaught of newcomers has permanently damaged the bottom line at Albertsons, Vons, Ralphs and Food 4 Less – all have which have closed multiple stores since the last strike. Ralphs, Orange County's largest grocery chain has 50 locations compared with 57 in 2006. The stores' combined sales represent a 32.8 percent share of the Southern California grocery market – down from roughly 59 percent in 2003, Flickinger said.

But if the union wants to maintain its benefits, Conger said they'll have to walk out.

"Strike is always a worst-case scenario, but it's the only weapon that working men and women have."